How to calculate an electricity bill

Two numbers multiplied, plus a fixed daily charge. The arithmetic is easy; knowing which figures to use is the part that trips people up.

The sum

(units used × unit rate) + (days × standing charge)

Units are kilowatt hours. The unit rate is in pence per kWh. The standing charge is in pence per day, and it applies to every day in the period whether you used anything or not.

A household using 850 kWh over a 91-day quarter at 24.5p, with a 60.1p standing charge, pays £208.25 for the electricity and £54.69 for being connected — £262.94 in total.

Where each figure comes from

  • Units used.The difference between two meter readings, or the figure your bill states for the period. If the bill says “estimated”, this number is a guess.
  • Unit rate and standing charge.On the page headed something like “how we worked out your charges”. Both are quoted including VAT.
  • Days. Count both the first and last day of the period. A bill running 1 to 31 January is 31 days, not 30.

Why your answer will not match exactly

A gap of a few percent is normal and expected. Rates change part-way through a period whenever the price cap moves or a fixed deal ends, and the bill then lists two sets of figures. Meter readings are taken on a different day from the one you assumed. VAT rounding moves things by pennies.

A gap larger than about 5% usually means one of three things: the reading was estimated, the period is a different length than you entered, or the rate you used is not the one being charged.

Estimated readings

This is the most common cause of a bill that looks wrong, and it is free to fix. An estimate is the supplier’s model of what you probably used; it drifts, and it drifts further the longer since your last actual reading. Submit a real reading and the period is rebilled against it.

Do that before concluding anything else is wrong. Until the estimate is replaced, nobody knows whether the bill is wrong or the guess is.

What is not in the sum

VAT is already inside the rates on a domestic bill, so do not add 5% on top. Credits and debits on your account, fixed discounts, and Warm Home Discount payments are all separate — the sum works out the cost of the energy, not the balance of the account.

The electricity cost calculator does this arithmetic and will compare the result against what your bill actually says. For the fixed part on its own, see what a standing charge is.